New York's media fraternity are a tough crowd, who are seldom impressed with anything apart, occasionally, from themselves. However, the relocation of the former News of the World editor Colin Myler to the editor's chair at the New York Daily News received a more excited reception than the habitual "meh" response. Myler, whose harassed-man-in-a-mac appearance should not deceive, brings with him plenty of tabloid experience and the compelling promise of a head-on collision with his former employers, the Murdochs.

He is the man who dared to directly contradict James Murdoch over the events surrounding the phone-hacking cover-up at the paper, and now will be seeking to cause trouble for News Corporation in another tabloid market.

Rupert Murdoch's New York Post has been the Daily News's bitter rival since News Corp repurchased the Post in 1993, following some nifty squaring of Federal Communications Commission regulations. The fact that the Daily News is owned by Mort Zuckerman, a similarly mythologised beast in the New York landscape, gives the titles' conflict piquancy. The Daily News and the Post, which represent Thing One and Thing Two to the New York Times's Cat in the Hat, have relentlessly chased each other in a slowly declining print market with the Daily News coming out ahead, with a circulation of just over 600,000 a day while the Post has slipped to just over 500,000. Myler's appointment is a little salt in the open wound of this gap.

One issue that his arrival will raise for Rupert Murdoch is how much News Corp wishes to throw behind its tabloid and turn this into a competition again. When Murdoch launched his spectacular Daily iPad venture a year ago – the middle-market, tablet-only edition for "everybody", which actually seems to be more accurately for "nobody" – the Post felt moribund. Not only did its managing editor, Jesse Angelo, move to the $30m app operation, so did the attention of the chairman and chief executive, who declared at the lavish launch that a "new type of journalism" was needed for the new age. While most other details at launch proved to be flawed, maybe this prediction was something that Murdoch got right.

The Post's digital offering, once way ahead of the Daily News's, seemed to suffer from the same strategic sclerosis that the UK News International titles encountered in terms of their web traffic, whereas the Daily News pushed for growth and has recently been gathering pace with more national coverage digitally. One cannot imagine that James Murdoch, so badly bruised by the hacking scandal, will be spending much time in his relocation to the US wanting to take on Myler and a rival tabloid. However, there are rumblings of a renewed price war and a feeling at the Daily News that, although it has stayed well ahead of the Post, the brief editorship of Kevin Convey did not connect as well to New Yorkers as some of the more rumbustious coverage from its rival.

Much as one would like to imagine the newspaper wars of New York as green eye-shades at dawn, this conception is as romantic and passe now as the notion of crime in Central Park (17 robberies last year, compared to over 700 30 years ago). The media ground for local New York coverage is also shifting.

Both tabloids face competition from a plethora of smaller web-based startups and ever-expanding entertainment sites moving into their territory. The scrappy DNAinfo startup, backed by another billionaire, J Joseph Ricketts – which seeks to cover the city neighbourhood by neighbourhood – has expanded rapidly on a minuscule cost base.

Wild rumours circulated last year that DNAinfo would buy the Daily News, and although so far this has not looked like being true, there is certainly a strong sense that the site's hyper-local coverage is hitting gaps left by the tabloids, digitally torn between citywide and national coverage. Run by a young woman, Leela de Kretser, who has beat reporters working from laptops dotted round the city rather than from expensive midtown offices or SoHo lofts, DNAinfo has time and cost structure on its side, if not an immediately obvious revenue advantage. Another recent startup, Capital New York,from former New York Observer journalists Josh Benson and Tom McGeveran, showed confidence by adding more funding and staff last year.

Myler, who worked at Murdoch's Post prior to the News of the World, will be wanting to inflict a few defeats on News Corp. But the reality is that both tabloids are embroiled in a wider war, not just this specific battle.